Understanding
Credit & Credit
Risk Scores
Plus, Helping Consumers
Get The Most From Their
Credit Rating
This document contains actual excerpts from Fair Isaac, TransUnion, Equifax and Experian. CoreLogic Credco
thanks Fair Isaac, Equifax, Experian and TransUnion for their assistance in producing this document.
BEACON is a registered trademark of Equifax, Inc., Atlanta, GA.
FICO is a registered trademark of Fair Isaac and Company, Inc.
CoreLogic Credco does not provide legal advice; therefore, this information is not intended, or should be perceived,
as offering legal counsel to our customers.
Introduction
What is a credit score and how does it work? ............................................................................................................................................4
Understanding the Credit Score
What goes into a credit score? ......................................................................................................................................................................6
Why did this credit file receive the score it did? ........................................................................................................................................8
What effect, if any, do inquiries have on credit bureau scores? ..............................................................................................................8
Scoring Models....................................................................................................................................................................................................10
Working with a Credit Score
How do you increase a credit score? ..........................................................................................................................................................12
Are there any tools available to help me determine how to increase a credit score? .........................................................................12
I have information on my credit report that is incorrect. What can I do to fix it? ........................................................................... 13
Can I get assistance in filing a dispute? ................................................................................................................................................... 13
Understanding Non-Traditional Credit ....................................................................................................................................................14
Know Your Rights
The FACT Act .................................................................................................................................................................................................15
Obtaining a free credit report .....................................................................................................................................................................15
Will the free credit report include a score? ...............................................................................................................................................15
For More Information.......................................................................................................................................................................................16
Appendix
FICO Factor Codes .......................................................................................................................................................................................17
Equifax Beacon 5.0 ..................................................................................................................................................................................... 20
TransUnion FICO Classic 98/04 ..............................................................................................................................................................22
Experian FICO II Model ..............................................................................................................................................................................24
Understanding Credit and Credit Risk Scores
INTRODUCTION
Credit Bureau Scoring
Credit scoring has been around since the 1950s, with
credit bureau scoring becoming widely available by the
1980s. Today, credit bureau scores are used extensively
across many industries; most notably, mortgage lending.
Understanding credit – and what it means to consumers
and real estate professionals – is critical, as it represents
the underlying basis for which mortgage loans are
determined. When someone applies for a loan, the lender
determines how much the individual can borrow, for how
long, and at what interest rate; all of which is based on the
consumer’s credit history and credit bureau scoring.
This booklet is designed to help you understand the
fundamentals of credit and credit risk scores in
mortgage lending. It also provides some recommended
approaches to help you help consumers get the most from
their credit rating.
What is a credit score and how does it work?
Credit bureau scoring is a statistical means of assessing
how likely a borrower is to pay back a loan. A score is
based on the data available in the borrower’s credit report,
which measures the relative degree of risk a potential
borrower represents to the lender. It is not a measure of a
borrower’s income, assets, or bank account, although those
and other factors are still considered by lenders. A credit
bureau score does not consider the following variables
in the score calculation, as it would be discriminatory by
FCRA guidelines: gender, race, age, or ZIP code.
4
FICO® credit risk scores range from approximately 300 to
850 points, and are available through the three national
credit data repositories (Equifax®, TransUnion, and
Experian®). The following FICO scoring programs reside at
these credit bureaus:
Equifax:
BEACON® 5.0
TransUnion:
FICO Classic ‘98 or ‘04
Experian:
FICO II
This score is calculated at the credit bureau, and is based
solely on the data within that repository’s individual credit
file. FICO is not able to access a consumer’s credit data or
calculate a score.
A FICO credit risk score is calculated by a system of
scorecards. In developing these scorecards, Fair Isaac uses
actual credit data on millions of consumers, and applies
complex mathematical methods to perform extensive
research into credit behavior patterns that forecast credit
performance. Through this process, FICO identifies
distinctive credit patterns, each corresponding to the
likelihood that a consumer will make loan payments as
agreed. The score is based on all the credit-related data
in the credit bureau report, not just negative data such
as missed mortgage payments or bankruptcies. Although
the FICO scores are helpful in predicting the likelihood of
default, their main purpose is to predict loan delinquency.
If loan default is the focus of your scoring objectives, you
should investigate bankruptcy predictive scoring models.
The types of credit information used in the credit bureau
scorecards are typically the same items an underwriter
would use to make a credit decision. These can include:
Payment history
►
Public record and collection items
►
Severity, recentness and frequency of delinquencies noted
in the trade line section
Amounts Owed
Types of Credit Used
►
Number of trade lines reported for each type
►
Mortgage
►
Auto Loans
►
Bankcard / Credit cards
►
Travel and entertainment cards
►
Department store cards
►
Personal finance company references
►
Number of balances recently reported
►
Installment loans
►
Average balance across all trade lines
►
Other
►
Relationship between total balances and total credit limits
on revolving trade lines
Length of Credit History
►
Age of oldest trade line
►
Number of new trade lines
FICO observes a large number of credit report histories
of borrowers to determine which credit report items, or
combination of items, are the most predictive of future
risk. This data indicates the amount each item
contributes to an accurate assessment of credit risk.
New Credit
►
Number of inquiries and new account openings in the last
year
►
Amount of time since most recent inquiry
FICO SCORES DO NOT USE RACE, COLOR, RELIGION, NATIONAL ORIGIN, SEX, MARITAL STATUS OR AGE AS PREDICTIVE
CHARACTERISTICS. OCCUPATION AND LENGTH OF TIME IN PRESENT RESIDENCE ARE ALSO NOT USED IN THE CREDIT
BUREAU SCORE. ALSO, ANY INFORMATION THAT IS NOT PRESENT IN A REPOSITORY CREDIT FILE IS NOT USED IN CREATING
A CREDIT BUREAU SCORE.
5
Understanding Credit and Credit Risk Scores
UNDERSTANDING THE CREDIT SCORE
What goes into a credit score?
1. Payment History (about 35% of a score is based on this category)
The score takes into account:
►
Payment information on many types of acounts, including credit cards, retail accounts, installment loans, finance company
accounts and mortgage loans.
►
Public record and collection items: reports of events, such as bankruptcies, judgments, suits, liens, wage attachments and
collection items.
►
Details on late or missed payments and public record and collection
items: specifically, how late they were, how much was owed, how recently
they occurred and how many there are.
►
The number of accounts that show no late payments. A good track
record on most credit accounts will increase the credit score.
2. Amounts Owed (about 30% of the score is based
on this category)
Having credit accounts and owing money on them does not mean
you are a high-risk borrower with a low score. Owing a great deal of
money on many accounts can indicate that a person is overextended,
and is more likely to make some payments late or not at all. Part of the
science of scoring is determining how much is too much for a given
credit profile.
The score takes into account:
6
►
The amount owed on all accounts. Note that even if you pay off credit cards in full every month, your credit report may show a
balance on those cards. The total balance on your last statement is generally the amount that will show in your credit report.
►
The amount owed on specified types of accounts. In addition to the overall amount owed, the score considers the amount owed on
specific types of accounts, such as credit cards and installment loans.
►
Amount of balance owed. In some cases, having a very small balance without missing a payment shows that you have managed
credit responsibly, and may be slightly better than no balance at all. On the other hand, closing unused credit accounts that show
zero balances and that are in good standing will not generally raise your score.
►
How many accounts with balances. A large number of accounts with balances can indicate higher risk of over-extension.
►
How much of the total credit line is being used on credit cards and other “revolving credit” accounts. Someone closer to “maxing
out” on many credit cards may have trouble making payments in the future.
►
Balance on installment loan accounts compared with the original loan amounts. Paying down installment loans is a good sign
that you are able and willing to manage and repay debt.
3. Length of Credit History (approximately 15% of a score is based on this category)
In general, a longer credit history will increase the credit score. However, even those with short credit histories
may get high scores, depending on how the rest of the credit report looks.
The score takes into account:
►
How long credit accounts have been established, in general. The score considers the age of the oldest account as well as the
average age of all accounts.
►
How long specific credit accounts have been established.
►
How long it has been since certain accounts have been used.
4. New Credit (approximately 10% of a score is based on this category)
Opening several credit accounts in a short period of time represents a greater risk, especially for those who do not
have a long established credit history. This also extends to requests for credit, as indicated by “inquiries” to the credit
reporting agencies.
The score takes into account:
►
How many new accounts there are.
►
How long it has been since those accounts opened.
►
How many recent requests for credit have been made, as indicated by inquiries to the credit reporting agencies. Note that if a
credit report is ordered from a credit reporting agency, such as to check it for accuracy, the score does not count. It also doesn’t
count when a lender requests a credit report or score in order to make a “pre-approved” credit offer, or to review the account with
them, even though these inquiries will show up on the consumer's copy of the credit report.
►
Length of time since credit report inquiries were made by lenders.
►
Whether you have a good recent credit history, following past payment problems.
►
Re-establishing credit and making payments on time after a period of late payment behavior will help to raise a score over time.
5. Types of Credit in Use (approximately 10% of a score is based on this category)
The score will consider the mix of credit cards, retail accounts, installment loans, finance company accounts and
mortgage loans. It is not necessary to have one of each, and it is not a good idea to open credit accounts you don’t
intend to use.
The score takes into account:
►
The types of credit accounts you have and the number of each. The score also looks at the total number of
accounts you have. For different credit profiles, what determines too many accounts will vary.
7
Understanding Credit and Credit Risk Scores
UNDERSTANDING THE CREDIT SCORE
Why did this credit file receive the score it did?
To understand why a credit report scored the way it did, look at the four reason codes given with each score. These are
the top reasons why it did not score higher, although other factors probably contributed. Lenders should receive these
reasons, referred to as factor codes, along with the score when it’s obtained through a credit reporting company. A
complete list of score factor codes is included in this booklet (see Appendix):
Factor codes are either a number or letter, followed by a brief description. For example, a score of 563 may have the
following factors:
02 – Delinquency on accounts
01 – Amount owed on accounts is too high
09 – Too many accounts opened in last 12 months
19 – Too few accounts currently paid as agreed
Factor codes can be relayed back to the borrower to explain how they can increase their score over time. Score factors are
less meaningful for higher-scoring credit records as they merely point to the reasons why the file did not score
even higher.
What effect, if any, do credit inquiries have on Credit Bureau Scores?
A credit inquiry is an item on a credit report that shows a business with a “permissible purpose” (as defined under the
federal Fair Credit Reporting Act) has previously requested a copy of the report. There are two types of credit inquiries –
hard and soft:
Hard Inquiry: Hard inquiries are initiated by the consumer, appear on the credit report, and will have an impact on
the consumer’s credit score. Examples include when a consumer applies for a mortgage, auto loan, or other credit.
Soft Inquiry: Soft inquiries are not initiated by the consumer for the purpose of applying for credit and do not have
an impact on the consumer's credit score. Examples include when a consumer requests their own credit report; credit
checks that are made by businesses in order to offer goods or services; and credit checks by prospective employers.
Mortgage and Auto Loan Inquiries: When shopping for mortgage and auto loans, consumers tend to have their credit
run more often within a short period of time. The credit industry has taken this into account and to compensate,
the FICO and NEXT GEN scores will ignore all mortgage and auto inquires made in the 30 days prior to scoring.
Additionally, the score will also look at mortgage and auto inquiries older than 30 days and will count all those inquiries
within a typical shopping period of 45* days as one inquiry.
8
Inquiries on your credit report will appear in a manner similar to this:
9
Understanding Credit and Credit Risk Scores
SCORING MODELS
FICO Industry Scores
All three national bureaus offer an industry specific FICO score to help lenders gain more insight into a consumer’s
payment behavior within that particular industry. FICO offers industry-specific scores for bankcards, auto lending,
installment lending, and finance company lending. When an industry score is requested, the credit file is initially scored
on the base FICO models, and is then adjusted by two additional scorecards that apply to that particular industry. Of the
two additional scorecards, one applies to credit files with derogatory information, while the other applies to credit files
without derogatory information for any type of account. The credit file score is then adjusted to consumer trends that
are specific to that industry.
Keep in mind that each bureau may also offer their own scores that are industry specific.
FICO Scores
The FICO score was developed to measure the degree of risk a potential borrower represents to the lender. Today, FICO
is the leading high-performance credit-scoring model, and is used across many industries. FICO scores are calculated
by the credit bureaus from data contained in the bureaus’ files. This data is then put into a standardized algorithm
to determine the consumer’s score. Up to four “score factor codes” and their descriptions can be provided in an easyto-read format on the summary page of the credit report. These codes provide an indication of the factors that most
influenced the score. FICO scores range from approximately 300–850. The higher the FICO score, the lower the lender’s
risk. Below are the most commonly used FICO scores:
Beacon 5.0 (Equifax)
FICO II (Experian)
FICO Classic ‘04 (TransUnion)
FICO ‘08
FICO has modified their scoring formula to provide a better way of analyzing risk, which will help lenders to predict
the likelihood of a borrower defaulting on a loan. FICO ‘08 is predicted to help lenders reduce their default rates on
consumer loans between 5 to 15%. Here are the key differences between FICO ‘08 and other FICO models:
►
FICO ‘08 is more forgiving of consumers with a couple late payments, but harder on those who are repeat offenders
►
More weight will be given to consumers with a variety of credit types
►
Increased protection for lenders from authorized user abuse while still recognizing legitimate authorized user accounts
►
Consumers who use a high percentage of their available credit will be penalized to a greater extent
10
Vantage Score
Vantage Score is the first credit scoring model that was developed collaboratively by Experian, TransUnion and
Equifax to create a new standard in the market. It was created through the analysis of approximately 15 million
anonymous consumer credit profiles pulled from all three national credit reporting agencies. Using a characteristic
leveling model, Vantage Score interprets the same data from different sources (the three national credit bureaus) in
the same manner. By using the same scoring model across all three credit reporting agencies, Vantage Score increases
consistency and predictability. It’s based on a 24 month performance period and scores range from 501-990; the higher
the score, the lower the lenders risk.
Next Gen Scores
FICO developed next generation score models incorporating several innovations. The new models allow credit grantors
to make significantly better credit management decisions by using close to 80 predictive variables in the determination
of the scores, which is nearly twice the number of variables used in the existing FICO models. There are 18 separate
scorecards for each model, compared to 10 in the existing FICO models. Score ranges from 150-950; the higher the
score, the lower the lenders risk. Below are the Next Gen Scores that each bureau offers:
Pinnacle (Equifax)
Advanced Risk Score (Experian)
FICO Risk Score, NextGen (TransUnion)
Bankruptcy Scores
Bankruptcy risk scores from the credit repositories predict the likelihood of the borrower declaring bankruptcy. The
higher the score, the higher the risk that a bankruptcy will occur.
BNI 3.0 (Equifax)
Bankruptcy Score (Experian)
Delphi (TransUnion)
11
Understanding Credit and Credit Risk Scores
WORKING WITH A CREDIT SCORE
How do you increase a credit score?
Over time, a borrower can improve the information in their credit report by paying credit obligations on time and using
credit wisely. As derogatory data in the credit report gets older, it has less influence on the score. A missed payment from
four years ago will not count as much as a missed payment that is six months old.
A credit score, like a credit report, is essentially a snapshot of a consumer’s changing credit record. Scores from the
national credit bureaus may be different since the available data may be different from each repository. If a request is
made to obtain an updated score, the score is likely to change for various reasons; however, it’s not possible to limit how
that score will change. Credit items are updated often, so new items are likely to have been added since the previous
report. Additionally, existing items will have aged. Repeatedly requesting a consumer’s credit report may substantially
increase the number of inquiries on the repository report, which may affect the score adversely.
It is also possible that you can affect the credit score by paying down credit cards and transferring balances. Part of the
credit score is based on the total amount of credit used versus the total amount available. Transferring balances to reflect
more available credit on each card may have a positive impact on the score.
However, ensuring a score increase in this case is not always possible. Such actions may upset the mix of available credit,
and may actually decrease the score. It’s important to note that the point of scoring is not to calculate an up-to-date debt
ratio – the debt ratio is still considered by lenders independent of the score. Therefore, it’s not critical that balances be
completely up to date for the purpose of scoring.
The score reflects data available on the credit report to assess the consumer’s current payment patterns and
payment history.
Are there any tools available to help me determine how to increase a credit score?
There are numerous Web sites that claim to have the ability to “repair” credit or increase scores to the limit needed;
however, be cautious. When it comes to credit, there are no easy fixes. Responsibility and time will fix past problems.
There are, however, industry tools to help you determine if there are errors or inaccuracies – and how to fix them – to
legitimately maximize credit scores. One such product is called CreditXpert, offered by CoreLogic Credco. CreditXpert
helps you uncover a consumer’s true score, so you can make more informed and appropriate lending decisions.
With CreditXpert’s Detective, Essentials and What-If Simulator, you can approve more applicants and eliminate
guesswork by providing helpful insights, predictions, and more thorough analysis.
►
CreditXpert Essentials™ proactively uncovers pay-downs, open/close account actions, balance transfers and other
ways to help improve scores.
►
CreditXpert Detective™ automatically identifies opportunities to improve credit scores by updating incorrect,
missing and outdated information.
►
CreditXpert What-If Simulator™ offers predictive capabilities to let you safely simulate changes to the credit profile
to determine impacts to the applicant’s score.
12
I have information on my credit report that is incorrect. What can I do to fix it?
Consumers who want to address what they believe is erroneous information on a mortgage report should contact
the credit reporting agency that developed the report. The Fair Credit Reporting Act (FCRA) allows the credit
reporting agency a “reasonable period of time,” generally not to exceed 30 days, to reinvestigate consumer disputed
items. A significant number of credit grantors use an automated system for investigating disputes and respond within
a few days. Most credit reporting agencies make a special effort to quickly resolve disputed information affecting a
mortgage decision.
Consumers wishing to dispute items on their credit files can do so through the following credit bureaus:
Equifax: (800) 685-1111, www.equifax.com
Experian: (888) 397-3742, www.experian.com
TransUnion: (800) 916-8800, www.transunion.com
The score is generated using the credit information at one of the three national credit repositories. Therefore,
changes made solely to the mortgage credit report and not to the credit repository information will not affect
the score.
It is the policy of many lenders and investors, including Freddie Mac and Fannie Mae, that if gross inaccuracies appear
on the credit file, erroneous information can be documented and the score disregarded. The applicant is not required
to go through the procedure of changing the information at the credit repository for the purpose of altering the credit
score in these cases.
Can I get assistance in filing a dispute?
When a credit report is ordered through Credco, consumers get free access to a convenient, toll-free consumer disputes
service. With just one call, FCRA-certified specialists will work hand-in-hand with consumers to resolve any discrepancies
with the national credit bureaus. As a single contact point, Credco’s Consumer Disputes Resolution service makes the
often complicated and time-consuming credit dispute process easier for your clients, and you.
“One-call” Dispute Resolution
►
Dispute Investigations – Credco investigates tradelines by working directly with the credit bureaus.
►
Consumer Interaction – Credco actively communicates the results of our investigative process to the consumer.
►
Bureau Communication – Credco Consumer Disputes team works with the bureaus on the consumer’s behalf to
update incorrect data.
►
FCRA Compliance – Credco strictly adheres to the guidelines set by the FCRA regarding timeframes, forms
and procedures.
Once credit information has been corrected, you can then request Rapid ReCheck, an innovative service offered by
Credco, which speeds up the bureau-level update process. Rapid ReCheck provides fast, permanent updating of national
repository records – and an updated FICO score. When you obtain your client’s original source documentation from the
credit grantor, simply forward it to Credco for validation by our credit specialists. Once validated, it will be forwarded to
the appropriate credit bureau(s) and processed within three to five business days.
13
Understanding Credit and Credit Risk Scores
UNDERSTANDING NON-TRADITIONAL CREDIT
The banking industry has begun to look beyond traditional credit reports and scores as the primary indicators of
consumer creditworthiness. The industry is realizing that just because a consumer does not have a complete traditional
credit history, it doesn’t mean they are a credit risk. For example, many consumers don’t believe in debt, they make
payments on time and have a decent amount of money in a savings account.
In the past, it was difficult for lenders to ascertain the credit risk for these consumers. However, that has all changed.
Innovative new products, such as the Anthem Report from Credco, assess a consumer's credit worthiness by looking at
alternative payment histories such as rent, utility and
insurance payments. By examining these payment
histories, lenders can accurately determine the
relative credit risk for a consumer. As a result, many
consumers with strong alternative payment histories
can now qualify for the same loans as consumers with
traditional credit histories and scores.
Non-Traditional Credit Reporting
Many consumers have little or no traditional credit,
but are credit worthy. With Anthem, Credco’s suite of
alternative credit services, lenders can originate any
non-traditional loan and help more homebuyers fulfill
the American dream.
The Anthem Report offers the most cost-effective
credit reporting solution for consumers with little or
no credit history. This powerful reporting tool delivers verified non-traditional credit data – along with a unique score –
in an easy-to-use format that allows lenders to qualify more borrowers.
14
KNOW YOUR RIGHTS
The FACT Act
With the passage of the Fair and Accurate Credit Transaction (FACT) Act in 2004, the federal government created a “Bill
of Rights” for consumers that is designed to help consumers understand what is contained in their credit report. Among
other things, the FACT Act states that consumers are entitled to:
►
A free credit report from each of the three national credit bureaus once a year.
►
Removal of potentially fraudulent information from a credit report if a consumer establishes that they have been a victim of
identity theft.
►
Any information a business has received that is believed to be from someone that has stolen their identity.
Obtaining a free credit report
In response to the passage of the FACT Act, the three national credit bureaus were required to create a single resource
for consumers to access their once-yearly free credit report. While there are many other Web sites that claim to provide a
“free” credit report, there is only one place that offers a truly free report - www.annualcreditreport.com.
This Web site is officially sanctioned to allow consumers to get a free credit report from Experian, Equifax and
TransUnion. You can also arrange to have yearly reminders sent to you to pull your report.
Be cautious: many sites that offer “free” credit reports will require you to sign up for a service that requires you to pay
after a limited trial period has elapsed. Only annualcreditreport.com offers free reports with no strings attached.
Will the free credit report include the credit score?
No. The free credit report will not come with a score. If you would like to order a credit score, you can do so for a
nominal fee. However, as covered earlier in this book, there are numerous scores in the market. The national credit
bureaus offer several score options to consumers. If you are looking for a score for a specific purpose (home purchase,
auto purchase, credit card application, etc.), it is recommended you research which scores those industries will accept.
15
Understanding Credit and Credit Risk Scores
FOR MORE INFORMATION
Credit Bureau Contact Information
(For questions or to dispute an item on your credit report)
Equifax Information Service Center
P.O. Box 740241
Atlanta, GA 30374-0241
800-685-1111
www.equifax.com
Experian Information Solutions, Inc.
P.O. Box 2002
Allen, TX 75013
888-397-3742
www.experian.com
TransUnion Corporation
P.O. Box 34012
Fullerton, CA 92834
800-916-8800
www.transunion.com
16
To Get Your Free Credit Report
www.annualcreditreport.com
To Get Your FICO Score
www.myfico.com/Products/FICOOne/Description.aspx
Credit Education
www.myfico.com/crediteducation
Credit Counseling
►
National Foundation of Credit Counseling (NFCC)
www.nfcc.org
►
The Department of Housing and Urban
Development
www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm
►
Association of Independent Consumer Credit
Counseling Agencies (AICCCA)
www.aiccca.org
FICO FACTOR CODES
FICO Scoring System - Factor Codes
This chart lists the score factor codes and corresponding reason statement descriptions for FICO broad-based credit
bureau risk scores and associated Industry Option scores (Auto, Bankcard, Installment and Personal Finance) across the
major credit bureaus. This chart may be used as a reference when taking adverse action or in customer service when
responding to consumers’ inquiries as to the reasons for declination.
Time since derogatory public record or collection too short
20
20
V/20
Amount past due on accounts
21
21
W/21
Factor Codes chart continued on next page
17
Understanding Credit and Credit Risk Scores
FICO FACTOR CODES
18
Serious delinquency, derogatory public record or collection
22†
22
X/22
Number of bank or national revolving accounts with balances
23
--
--
No recent revolving balances
24
24
U/24
Length of time installment loans have been established
25†
--
25†
Number of revolving accounts
26†
--
26†
Number of bank or other revolving accounts
--
26†
--
Number of established accounts
28
28
28†
No recent bankcard balances
--
29
--
Time since most recent account opening is too short
30
30
Z/30
Too few accounts with recent payment information
31
--
31†
Amount owed on delinquent accounts
34
31†
34†
Payment due on accounts
--
36
--
Length of time open installment loans have been established
--
--
36†
Number of consumer finance company accounts established
relative to length of consumer finance history
--
--
37†
FICO FACTOR CODES
Serious delinquency and public record or collection filed
38
38
38†
Serious delinquency
39
39
39†
Derogatory public record or collection filed
40
40
40†
Lack of recent auto loan information
98†
97†
98†
--
98†
--
99†
99†
99†
Length of time consumer finance company loans
have been established
Lack of recent consumer finance company account information
Credit bureau risk score factor reason codes legend
►
† indicates that the code is only used in one or more Industry Options but is not currently used in
the base model.
►
A number in the column specifies the code associated with the reason statement for that score.
►
A blank in the column indicates that the code is not presently delivered with that particular score.
FICO has worked closely with the Federal Reserve Board and the Office of the Comptroller of the Currency in developing
the statements associated with these score factor reason codes, but in any event we recommend that FICO be consulted
whenever changes to score factor code reason statements are made. If this is necessary, please contact FICO’s toll-free
Credit Bureau Scores Helpline at 1-800-777-2066.
BEACON is a registered trademark of Equifax Credit information Services, Inc.
19
Understanding Credit and Credit Risk Scores
EQUIFAX BEACON 5.0
How the Equifax Beacon 5.0 score appears on a CoreLogic Credco Instant Merge Report:
Equifax BEACON Adverse Action Codes
The Adverse Action Codes reflect the most significant characteristics contributing to the score a consumer’s
credit file receives when requesting BEACON. The Adverse Code is a number code that corresponds to the
following narratives.
CODE Explanation
CODE Explanation
01
Amount owed on accounts is too high
11
Amount owed on revolving accounts is too high
02
Level of delinquency on accounts
12
03
Too few bank revolving accounts
Length of time revolving accounts have been
established
04
Too many bank or national revolving accounts
13
Time since delinquency is too recent or unknown
05
Too many accounts with balances
14
Length of time accounts have been established
06
Too many consumer finance company accounts
15
Lack of recent bank revolving information
07
Account payment history is too new to rate
16
Lack of recent revolving account information
08
Too many inquiries last 12 months
17
No recent non-mortgage balance information
09
Too many accounts recently opened
18
Number of accounts with delinquency
10
Proportion of balances to credit limits is
too high on bank revolving or other revolving
accounts
19
Too few accounts currently paid as agreed
20
Length of time since derogatory public record or
collection is too short
20
Codes continued
CODE Explanation
CODE Explanation
21
Amount past due on accounts
31
22
Account not paid as agreed, public record, or
collection agency filing
Too few accounts with recent payment
information
32
Lack of recent installment loan information
23
Number of bank or national revolving accounts
with balances
33
Proportion of loan balances to loan amounts is
too high
24
No recent revolving balances
34
Amount owed on delinquent accounts
25
Length of time installment loans have been
established
38
Serious delinquency, and derogatory public record
or collection filed
26
Number of revolving acounts
39
Serious delinquency
28
Number of established accounts
40
Derogatory public record or collection filed
30
Time since most recent account opening is
too short
98
Lack of recent auto finance loan information
99
Lack of recent consumer finance company account
information
List of Equifax BEACON 5.0 Reject Messages
The Reject message is a one-byte alpha code that corresponds to the following narratives. Narrative Table:
For more information on Equifax products call 1-800-879-1025.
Equifax is a registered trademark, and BEACON is a registered trademark of Equifax, Inc.
21
Understanding Credit and Credit Risk Scores
TRANSUNION FICO CLASSIC 98/04
How the TransUnion FICO Classic 98/04 score appears on a CoreLogic Credco Instant Merge Report:
FICO Classic 98/04 Scoring Factors
CODE Explanation
CODE Explanation
00
No adverse factor
11
Amount owed on revolving account is too high
01
Amount owed on accounts is too high
12
02
Level of delinquency on accounts
Length of time revolving accounts have been
established
03
Proportion of loan balances to loan amounts
is too high
13
Time since delinquency is too recent or unknown
14
Length of time accounts have been established
04
Lack of recent installment loan information
15
Lack of recent bank revolving information
05
Too many accounts with balances
16
Lack of recent revolving account information
06
Too many consumer finance company accounts
17
No recent non-mortgage balance information
07
Account payment history is too new to rate
18
Number of accounts with delinquency
08
Too many inquiries last 12 months
19
Date of last inquiry too recent
09
Too many accounts recently opened
20
10
Proportion of balances to credit limits is too high `
on bank revolving or other revolving accounts
Length of time since derogatory public record or
collection is too short
21
Amount past due on accounts
22
Serious delinquency
22
Codes continued
CODE Explanation
CODE Explanation
36
Payments due on accounts
24
No recent revolving balances
38
26
Number of bank revolving or other revolving
accounts
Serious delinquency, and public record or
collection filed
39
Serious delinquency
27
Too few accounts currently paid as agreed
40
Derogatory public record or collection filed
28
Number of established accounts
41
No recent retail balances
29
No recent bankcard balances
42
30
Time since most recent account opening is
too short
Length of time since most recent consumer finance
company account established
50
Lack of recent retail account information
Amount owed on delinquent accounts
56
Amount owed on retail accounts
97
Lack of recent auto loan information
31
FICO Classic 98/04 Message Codes
FICO Classic 98/04 ALERT message occurs when a credit file scored by FICO Classic 98/04 contains one or more of
the following: previous bankruptcy, derogatory public record, collection activity or an MOP 7 or higher.
FICO Classic 98/04 NOT SCORED: DECEASED message occurs when the subject’s Social Security Number matches
the Social Security Administration’s deceased Social Security Number file.
FICO Classic 98/04 NOT SCORED: INSUFFICIENT CREDIT message occurs when the subject’s credit file contains
only new tradelines, or when the subject’s credit file contains only tradelines that have not been updated within the
last six months.
For more information on TransUnion products call 1-800-916-8800.
23
Understanding Credit and Credit Risk Scores
EXPERIAN FICO II MODEL
How the Experian FICO II score appears on a CoreLogic Credco Instant Merge report:
Glossary of Experian FICO II Risk Model Score Factor Codes
(Auto Loan, Bank Card Loan, Installment Loan, and Personal Finance Options Included)
Numerical Alpha
Factor
Factor
Definition
Numerical Alpha
Factor
Factor
01
A
Current balances on accounts
11
L
02
B
Delinquency reported on
accounts
Current balances on revolving
accounts
12
M
03
C
Too few bank revolving
accounts
Length of revolving account
history
13
N
04
D
Too many bank revolving
accounts
Length of time (or unknown
time) since account delinquent
14
O
05
E
Number of accounts with
balances
Length of time accounts have
been established
15
P
06
F
Number of finance company
accounts
Insufficient or lack of bank
revolving account information
16
Q
07
G
Unable to evaluate recent
payment history
Insufficient or lack of revolving
account information
17
R
08
H
Number of recent inquiries
No recent (non-mortgage)
account balance information
09
J
Number of accounts opened
within the last twelve months
18
S
Number of accounts delinquent
19
T
Too few accounts rated “current”
10
K
Proportion of balance to high
credit on bank revolving or all
revolving accounts
20
V
Length of time since legal item
filed or collection item reported
24
Definition
Codes continued
Numerical Alpha
Factor
Factor
Definition
Numerical Alpha
Factor
Factor
21
W
Amount past due on accounts
33
22
X
Account(s) not paid as agreed
and/or legal item filed
34
24
U
Lack of recently reported
balances on revolving/open
accounts
36
*
Length of time open installment
loans have been established
25
*
Length of installment loan
history
37
*
Number of finance company
accounts established relative to
length of finance history
26
*
Number of revolving accounts
28
*
Number of accounts established
30
Z
Length of time since most recent
account established
31
32
*
Y
Too few accounts with recent
payment information
No recent installment loan
information
I
Definition
Proportion of current loan
balance to original loan amount
Amount owed on delinquent
accounts
38
Serious delinquency, and public
record or collection filed
39
Serious delinquency
40
Derogatory public record or
collection filed
98
*
Lack of recent information on
auto loan, or lack of auto loans
99
*
Lack of recent information
on finance accounts, or lack of
finance accounts
Experian Exclusion Messages – FICO II
When a score does not appear on the Experian credit profile report for a particular consumer account, an exclusion
message is generated as shown below.
For more information on Experian products call 1-800-854-7201.
25
About CoreLogic Credco
Tracing its history over 50 years, CoreLogic Credco is the nation’s number one provider of merged and
specialized credit reports, processing over 90 million credit and related transactions annually. With
access to one of the world’s largest consumer and business databases, CoreLogic Credco leads the
mortgage; automotive; bankruptcy; merchant services; recreational vehicle; marine and other specialty
credit and retail markets with a broad range of advanced business information solutions designed to
reduce risk and improve business performance. For more information visit www.credco.com.
About CoreLogic
CoreLogic (NYSE: CLGX) is a leading provider of consumer, financial and property information,
analytics and services to business and government. The company combines public, contributory and
proprietary data to develop predictive decision analytics and provide business services that bring
dynamic insight and transparency to the markets it serves. CoreLogic has built the largest U.S. real
estate, mortgage application, fraud, and loan performance databases and is a recognized leading
provider of mortgage and automotive credit reporting, property tax, valuation, flood determination,
and geospatial analytics and services. More than one million users rely on CoreLogic to assess risk,
support underwriting, investment and marketing decisions, prevent fraud, and improve business
performance in their daily operations. Formerly the information solutions group of The First American
Corporation, CoreLogic began trading under the ticker CLGX on the NYSE on June 2, 2010. The
company, headquartered in Santa Ana, Calif., has more than 10,000 employees globally with 2009
revenues of $2 billion. For more information visit www.corelogic.com.
Copyright © 2011 CoreLogic. All Rights Reserved.
CoreLogic and Credco are both registered trademarks of CoreLogic.
credco.com